Two trades to watch: GBP/USD, DAX

GBP/USD rises from weekly low after UK unemployment ticks lower. DAX falls, German ZEW sentiment data due.

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GBP/USD rises from weekly low after UK unemployment ticks lower

GBP/USD picks up off weekly lows but remains on the back foot against a stronger USD, even after data revealed that the UK labour market recovery continues.

UK unemployment ticked lower to 4.1% in the three months to November, down from 4.2% as British employers added 184,000 staff to payrolls.

Te claimant count fell by a further 43.3k in December after a downwardly revised 95.1k in November

The data suggests that the jobs market is flourishing, which will ease concerns at the BoE. Policy makers had previously cited concerns over the labour market as a reason not to hike rates.

The BoE is expected to raise interest rates at the next meeting 3rd February.

USD strength stemming from rising treasury yields and is limiting GBPUSD upside.

Learn more about the pound

Where next for GBP/USD?

GBP/USD has been extending gains from December lows around 1.3160 before running not resistance at the 200 sma on the daily chart at around 1.3750. The price has since eased lower moving below the rising trend line support but finds support at the 50 sma on the 4 hour chart, which along with the receding bearish bias on the MACD is keeping buyers optimistic of further gains.

Bulls will look for a move back over the rising trendline support turned resistance around 1.3690 in order to target 1.3750 the 2022 high.

Failure of the 50 sma at 1.3630 to hold could see the price test horizontal resistance at 1.36 and 1.35 ahead of the 2022 low of 1.3430.

gbpusd chart

DAX falls, German ZEW sentiment data due

The German DAX along with its European peers are heading lower on Tuesday, paring gains from the previous session.

The mood in the market has soured as US treasury yields rise ahead of the Fed. European bourses are tracing Asia lower. The US 2-year yield topped 1% for the first time in 2 years. The Fed are expected to hike possibly as soon as March.

European car sales plunged 22% in December, marking the sixth straight month of declines, showing the extent of the hit from the chip supply crises. VW was the worst performer in December with car sales dropping 30%.

Looking ahead, German ZEW economic sentiment data will be in focus. Expectations are for a rise to 32.7 in January, rising from 29.9 in December.

Learn more about the DAX

Where next for the DAX?

The DAX has been trending lower since hitting an all-time high on January 5th at 16278. The index trades below its 2-week falling trendline and has slipped below the 50 sma on the 4 hour chart.

The price has found support on the 200 sma fort now. However, the RSI is supportive of further losses whilst it remains out of oversold territory.

Sellers will need to break below the 200 sma at 15740, also the January 10 low in order to target 15400 the December 22 low on the way to 15059 the December low.

Should the 200 sma hold, buyers could look to break above the 50 sma and falling trendline resistance at 15950, to open the door to 16091 the January 13 high ahead of 16285 the all time high.

DAX chart


 

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